http://www.zerohedge.com/fullrss2.xml/Banks%20and%20insurers%20defend%20%C3%A2%E2%82%AC%CB%9Cliquidity%20swaps%C3%A2%E2%82%AC%E2%84%A2 en Even High School Kids Can See That Massive Systemic Risk That Deutsche Bank Represents http://www.zerohedge.com/news/2016-09-28/even-high-school-kids-can-see-massive-systemic-risk-deutsche-bank-represents <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">I was discussing the US Department of Justice $14B fine levied at Deutsche Bank with my 15 year old son last week. I told him the fine amounted to roughly 70% of Deutsche's market cap, while a similar retroactive tax levy from the EU towards Apple for $14B was about 3% of their cash on hand or a quarter's operating profit. &nbsp;My son said, "Whoah! Waitaminute! I thought Deutsche Bank was a big company like Apple. Didn't you say that they had trillions of euros of assets on their balance sheet?".</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">Indeed, I did say such, and he brings up a very valid point that is missed by many a so-called professional. DB is valued at 14.5 billion euros by Mrs Market, yet that amount controlls 1.8&nbsp;<strong style="box-sizing: border-box;"><em style="box-sizing: border-box;">trillion euros</em></strong>&nbsp;worth of assets, and 1.415&nbsp;<em style="box-sizing: border-box;"><strong style="box-sizing: border-box;">trillion&nbsp;</strong></em>after netting and credit adjustments, etc. And to think, some people think a 90 LTV loan is pushing the leverate limiit. Let's take a look at this from a graphica perspective to illustrate just how absurd it is...</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;"><strong style="box-sizing: border-box;"><strong style="box-sizing: border-box;">Over time, the accounting expression of equity diverges significantly from the markets perception of the bank's equity value. &nbsp;Somebody is most assuredly mistaken! As of today, DB's books are carrying equity value at 3x that of the stock market.&nbsp;</strong><img src="https://blog.veritaseum.com/images/DB_market_leverage.png" alt="DB market leverage" width="749" height="483" style="box-sizing: border-box; vertical-align: middle; display: block; max-width: 100%; height: auto;" /></strong></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">&nbsp;</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">If one were to use the stock market's equity valuation, one would see that a very, very tiny sliver of equity is controlling nearly 1.5 trillion euro of assets - and that's after the slimming down game is done. Expressed differently, DB is leveaged 97.4x.&nbsp;</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;"><img src="https://blog.veritaseum.com/images/DB_market-based_leverage_Ratio.png" alt="DB market-based leverage Ratio" width="750" height="483" style="box-sizing: border-box; vertical-align: middle; display: block; max-width: 100%; height: auto;" /></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">For those who feel this is an unrealistice way of looking at things, run the same exercise for every failed bank and cross reference the results to that of the European banking regulatory body's methodology of calculating leverage and tell me which methid was (and is) the better predictor of bank failure.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;"><img src="https://lh5.googleusercontent.com/9ugfOOSAWjbdjCXkl6ygmDeedSWU0y492df_9NjwHIsa94Vzz1WSub9UzcgUITqn25aV68nW6IQvDxECcVSmMTSjE-YKf9Lih5zxzdKdoPwAw_tpi9f8Ovt0T4E3b-ruaAFYSqNd" width="602" height="131" style="box-sizing: border-box; border-width: initial; border-style: none; vertical-align: middle; display: block; max-width: 100%; height: auto; font-family: Cambria; font-size: 16px; white-space: pre-wrap;" /></p> <table style="box-sizing: border-box; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; width: 1144px;" border="0"> <colgroup style="box-sizing: border-box;"><col style="box-sizing: border-box; width: 264pt;" /><col style="box-sizing: border-box; width: 74pt;" span="7" /><col style="box-sizing: border-box; width: 74pt;" /></colgroup> <tbody style="box-sizing: border-box;"> <tr style="box-sizing: border-box; height: 18.75pt;"> <td class="xl137" style="box-sizing: border-box; padding: 0px; height: 18.75pt; width: 856pt;" colspan="9">Leverage ratio measures</td> </tr> <tr style="box-sizing: border-box; height: 24.75pt;"> <td class="xl110" style="box-sizing: border-box; padding: 0px; height: 24.75pt; width: 264pt;">(In EUR bn., unless stated otherwise)</td> <td class="xl127" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Dec 31, 2014</td> <td class="xl127" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Mar 31, 2015</td> <td class="xl127" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Jun 30, 2015</td> <td class="xl127" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Sep 30, 2015</td> <td class="xl127" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Dec 31, 2015</td> <td class="xl127" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Mar 31, 2016</td> <td class="xl129" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Jun 30, 2016</td> <td class="xl129" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">Sep 28, 2016</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl115" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-top-width: initial; border-top-style: none; width: 264pt;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl124" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl124" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl111" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-top-width: initial; border-top-style: none; width: 264pt;">Total assets</td> <td class="xl116" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,709</td> <td class="xl116" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,955</td> <td class="xl116" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,694</td> <td class="xl116" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,719</td> <td class="xl116" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,629</td> <td class="xl116" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,741</td> <td class="xl104" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,803</td> <td class="xl104" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,803</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl133" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Changes from IFRS to CRR/CRD4<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(264)</td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(407)</td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(233)</td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(299)</td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(234)</td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(350)</td> <td style="box-sizing: border-box; padding: 0px;"> <table style="box-sizing: border-box; background-color: transparent;"> <tbody style="box-sizing: border-box;"> <tr style="box-sizing: border-box;"> <td class="xl108" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-left-width: initial; border-left-style: none; width: 74pt;">(389)</td> </tr> </tbody> </table> </td> <td style="box-sizing: border-box; padding: 0px;"> <table style="box-sizing: border-box; background-color: transparent;"> <tbody style="box-sizing: border-box;"> <tr style="box-sizing: border-box;"> <td class="xl108" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-left-width: initial; border-left-style: none; width: 74pt;">(389)</td> </tr> </tbody> </table> </td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl135" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Derivatives netting<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(562)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(668)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(480)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(508)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(460)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(523)</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(556)</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(556)</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl135" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Derivatives add-on<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">221</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">227</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">198</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">177</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">166</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">157</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">157</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">157</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl135" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Written credit derivatives<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">65</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">58</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">45</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">42</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">30</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">31</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">24</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">24</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl135" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Securities Financing Transactions<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">16</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">20</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">21</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">22</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">25</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">25</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">35</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">35</td> </tr> <tr style="box-sizing: border-box; height: 43pt;"> <td class="xl135" style="box-sizing: border-box; padding: 0px; height: 43pt; width: 264pt;">Off-balance sheet exposure after application of credit conversion factors<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">127</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">134</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">131</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">109</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">109</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">102</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">102</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">102</td> </tr> <tr style="box-sizing: border-box; height: 34pt;"> <td class="xl135" style="box-sizing: border-box; padding: 0px; height: 34pt; width: 264pt;">Consolidation, regulatory and other adjustments<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl130" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(131)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(177)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(148)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(140)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(104)</td> <td class="xl136" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(140)</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(151)</td> <td class="xl108" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">(151)</td> </tr> <tr style="box-sizing: border-box; height: 37pt;"> <td class="xl134" style="box-sizing: border-box; padding: 0px; height: 37pt; width: 264pt;">CRR/CRD4 leverage exposure measure (spot value at reporting date)<span class="font6" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl102" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,445</td> <td class="xl102" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,549</td> <td class="xl102" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,461</td> <td class="xl102" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,420</td> <td class="xl102" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,395</td> <td class="xl102" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,390</td> <td class="xl103" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,415</td> <td class="xl103" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1,415</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl117" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">&nbsp;</td> <td class="xl113" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl106" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl106" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl106" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl106" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl106" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl105" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl105" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl114" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Total equity</td> <td class="xl118" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">73.2</td> <td class="xl118" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">77.9</td> <td class="xl118" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">75.7</td> <td class="xl118" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">68.9</td> <td class="xl118" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">67.6</td> <td class="xl118" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">66.6</td> <td class="xl125" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">66.8</td> <td class="xl125" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">66.8</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl112" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Market share Price$</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">30.0</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">44.8</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">30.2</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">27.0</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">24.2</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">16.9</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">13.7</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">11.9</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl112" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Market Cap$</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">41.1</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">61.4</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">41.3</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">36.9</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">33.1</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">23.2</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">18.8</td> <td class="xl139" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">16.3</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl112" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Market Cap EUR</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">36.6</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">54.7</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">36.8</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">32.9</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">29.4</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">20.7</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">16.7</td> <td class="xl140" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">14.5</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl112" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Discrspency bet. Accounting &amp; Market-based Equity</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">50%</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">30%</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">51%</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">52%</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">56%</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">69%</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">75%</td> <td class="xl142" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">78%</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl112" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Simple, market price derived leverage (Equity/Net Assets)</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">2.53%</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">3.53%</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">2.52%</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">2.31%</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">2.11%</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1.49%</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1.18%</td> <td class="xl143" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">1.03%</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl132" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;">Regulatory Accounting (Fully loaded CRR/CRD4 Leverage Ratio in %<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1)</span></span></td> <td class="xl144" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">3%</td> <td class="xl144" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">3%</td> <td class="xl144" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">4%</td> <td class="xl144" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">4%</td> <td class="xl144" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">3%</td> <td class="xl144" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">3%</td> <td class="xl145" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">3%</td> <td class="xl145" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">3%</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl132" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-top-width: initial; border-top-style: none; width: 264pt;">Leverge Multiple</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">39.5x</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">28.3x</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">39.7x</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">43.2x</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">47.4x</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">67.3x</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">84.5x</td> <td class="xl146" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">97.4x</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl115" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-top-width: initial; border-top-style: none; width: 264pt;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl123" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl124" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl124" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">&nbsp;</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl131" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-top-width: initial; border-top-style: none; width: 264pt;">Fully Loaded CRR/CRD4 Tier 1 capital<span class="font6" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">2</span></span></td> <td class="xl119" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">50.7</td> <td class="xl119" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">52.5</td> <td class="xl119" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">51.9</td> <td class="xl119" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">51.5</td> <td class="xl119" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">48.7</td> <td class="xl119" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">47.3</td> <td style="box-sizing: border-box; padding: 0px;"> <table style="box-sizing: border-box; background-color: transparent;"> <tbody style="box-sizing: border-box;"> <tr style="box-sizing: border-box;"> <td class="xl120" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-left-width: initial; border-left-style: none; width: 74pt;">48.0</td> </tr> </tbody> </table> </td> <td style="box-sizing: border-box; padding: 0px;"> <table style="box-sizing: border-box; background-color: transparent;"> <tbody style="box-sizing: border-box;"> <tr style="box-sizing: border-box;"> <td class="xl120" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-left-width: initial; border-left-style: none; width: 74pt;">48.0</td> </tr> </tbody> </table> </td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;"> <table style="box-sizing: border-box; background-color: transparent;"> <tbody style="box-sizing: border-box;"> <tr style="box-sizing: border-box;"> <td class="xl128" style="box-sizing: border-box; padding: 0px; height: 15.15pt; width: 264pt;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">&nbsp;</span></td> </tr> </tbody> </table> </td> <td class="xl141" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl109" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl109" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl109" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl109" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl109" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl107" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> <td class="xl107" style="box-sizing: border-box; padding: 0px; border-left-width: initial; border-left-style: none;">&nbsp;</td> </tr> <tr style="box-sizing: border-box; height: 15.15pt;"> <td class="xl132" style="box-sizing: border-box; padding: 0px; height: 15.15pt; border-top-width: initial; border-top-style: none; width: 264pt;">Fully loaded CRR/CRD4 Leverage Ratio in %<span class="font5" style="box-sizing: border-box;"><span style="box-sizing: border-box; font-size: 10.5px; line-height: 0; position: relative; top: -0.5em;">1</span></span></td> <td class="xl122" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.5</td> <td class="xl121" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.4</td> <td class="xl121" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.6</td> <td class="xl121" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.6</td> <td class="xl121" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.5</td> <td class="xl121" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.4</td> <td class="xl126" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.4</td> <td class="xl126" style="box-sizing: border-box; padding: 0px; border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.4</td> </tr> <tr style="box-sizing: border-box; height: 15pt;"> <td class="xl138" style="box-sizing: border-box; padding: 0px; height: 15pt; width: 856pt;" colspan="9">1 Based on current CRR/CRD 4 rules (including amendments with regard to leverage ratio of Commission Delegated Regulation (EU) 2015/62 published in the Official Journal of the European Union on January&nbsp;17,&nbsp;2015).</td> </tr> <tr style="box-sizing: border-box; height: 12.75pt;"> <td class="xl138" style="box-sizing: border-box; padding: 0px; height: 12.75pt; width: 856pt;" colspan="9">2 Regulatory capital amounts, risk weighted assets and capital ratios are based upon CRR/CRD 4 fully-loaded.</td> </tr> </tbody> </table> <div style="box-sizing: border-box; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">&nbsp;</div> <div style="box-sizing: border-box; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">Here's my DB warning from 11 and half months ago...</div> <div style="box-sizing: border-box; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;"><iframe src="https://www.youtube.com/embed/i2q0Xus2IE8?rel=0" width="560" height="315"></iframe></div> <div class="uk-width-1-2" style="box-sizing: border-box; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; float: left; padding-top: 7px; padding-bottom: 7px; width: 397.75px;">&nbsp;Our next article will continue to hammer home the liklhood that DB will have to recapitalize, and where they probably WONT'T be getting the money from, as well as the likelihood it will come from someone who really didn't plan on giving it up (Ahem, depositors/savers/checking account holders). For those who are not yet convinced, peruse these related items...</div> <div class="itemRelated" style="box-sizing: border-box; margin-bottom: 16px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;"> <ul style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px;"> <li class="even" style="box-sizing: border-box; padding: 2px;"><a href="https://blog.veritaseum.com/index.php/current-analysis/1-blog/200-deustche-bank-and-the-anatomy-of-a-european-bank-run-look-at-the-situation-before-the-run-occurs" class="itemRelTitle" style="box-sizing: border-box; background-color: transparent; color: #ed1c24; transition: color 400ms, background-color 400ms; outline: none;">Deustche Bank and the Anatomy Of A European Bank Run: Look at the Situation BEFORE The Run Occurs</a></li> <li class="odd" style="box-sizing: border-box; padding: 2px;"><a href="https://blog.veritaseum.com/index.php/current-analysis/1-blog/199-deutsche-bank-as-ground-zero" class="itemRelTitle" style="box-sizing: border-box; background-color: transparent; color: #ed1c24; transition: color 400ms, background-color 400ms; outline: none;">Deutsche Bank as Ground Zero?</a></li> <li class="even" style="box-sizing: border-box; padding: 2px;"><a href="https://blog.veritaseum.com/index.php/current-analysis/1-blog/198-so-if-deustche-bank-s-xetra-gold-is-not-guilty-of-fraud-is-it-false-misleading-advertising" class="itemRelTitle" style="box-sizing: border-box; background-color: transparent; color: #ed1c24; transition: color 400ms, background-color 400ms; outline: none;">So, If Deutsche Bank's Xetra-Gold Is Not Guilty of Fraud, Is It Guilty of False &amp; Misleading Advertising</a></li> <li class="even" style="box-sizing: border-box; padding: 2px;"><a href="https://blog.veritaseum.com/index.php/current-analysis/1-blog/205-deutsche-bank-s-trading-at-a-quarter-of-book-value-and-here-s-why" style="box-sizing: border-box; background-color: transparent; color: #ed1c24; transition: color 400ms, background-color 400ms; outline: none;">Deutsche Bank's Trading At a Quarter of Book Value and Here's Why</a></li> <li class="odd" style="box-sizing: border-box; padding: 2px;"><a href="https://blog.veritaseum.com/index.php/current-analysis/1-blog/203-revisiting-the-run-on-deutsche-bank-making-the-hypothetical-frightenighly-realistic-you-ve-been-warned" style="box-sizing: border-box; background-color: transparent; color: #ed1c24; transition: color 400ms, background-color 400ms; outline: none;">Revisiting the Run on Deutsche Bank: Making the Hypothetical Frighteningly Realistic - You've Been Warned!</a></li> <li style="box-sizing: border-box;"><a href="https://blog.veritaseum.com/index.php/current-analysis/1-blog/202-what-happens-to-banks-when-the-real-funding-rate-appears" style="box-sizing: border-box; background-color: transparent; color: #ed1c24; transition: color 400ms, background-color 400ms; outline: none;">What Happens to Banks When the Real Funding Rate Appears?</a></li> </ul> </div> <h2 style="box-sizing: border-box; font-family: &quot;Open Sans&quot;, sans-serif; line-height: 1.1; color: #333333; margin-top: 20px; font-size: 30px;">Here's What A Real, Live Veritaseum 5x Short DB Smart Contract Looks Like to Our Research Subscribers&nbsp;</h2> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">&nbsp;If you haven't heard, we're giving out free, fully smart contracts as a 5% rebate to anyone who purchases any of our research packages above the introductory novice $50 level. This is not your Daddy's rebate! The rebate actually gets larger as DB goes down in price. For those who may be coming late to the party, we can offer a 5x long gold (or even a long gold, short DB) smart contract rebate as well. Of course, the bulk of our research targets banks and entities other than DB, but I thought we'd make DB the subject of the rebate to drive the point home. Below is an actual contract crafted off of the price of a single share of DB for about 2 weeks.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">&nbsp;<img src="https://blog.veritaseum.com/images/Veritaseum_5x_Short_DB_Smart_Contract.jpg" style="box-sizing: border-box; vertical-align: middle; display: block; max-width: 100%; height: auto;" /></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; color: #333333; font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px;">The research and knowledge subscription module "<a href="https://blog.veritaseum.com/index.php/corporates-valuation-equity-research/guruPrograms/1-corporate-valuation-equity-research/8-uk-bank-forensic-analysis-valuation" style="box-sizing: border-box; background-color: transparent; color: #ed1c24; transition: color 400ms, background-color 400ms; outline: none;">European Bank Contagion Assessment, Forensic Analysis &amp; Valuation</a>"&nbsp;contains a full report of a very large European Deutsche Bank&nbsp;counterparty that faces a full 27% downside from current levels. It appears as if no one suspects a clue. It also contains much, much more (including at least 3 to 5 suspect banks). We can break this apart a la carte, if requested.</p> http://www.zerohedge.com/news/2016-09-28/even-high-school-kids-can-see-massive-systemic-risk-deutsche-bank-represents#comments Apple Bank Run Book Value Department of Justice Deustche Bank Deustche Bank Deutsche Bank ETC European Union Market Share Wed, 28 Sep 2016 14:01:42 +0000 Reggie Middleton 573459 at http://www.zerohedge.com Janet Yellen Testifies: Five Key Things To Look For http://www.zerohedge.com/news/2016-09-28/janet-yellen-testifies-five-key-things-look <p>This morning, Janet Yellen testifies before the House Financial Services Committee on financial regulation topics. While there us unlikely to be much talk of monetary policy, it may come up, although most of the lawmakers’ questions are likely to relate to the Fed’s oversight of banks; other questions may touch on the Fed's recent bank commodity oversight push, the November election, and especially the recent Wells scandal. </p> <p><em>Here are the main things to watch for, courtesy of <a href="http://www.wsj.com/articles/five-things-to-watch-janet-yellens-testimony-on-regulation-1475011761">the WSJ</a>:</em></p> <ul> <li><strong>Big Bank Stress Tests</strong></li> </ul> <p>The Fed announced major changes to its stress testing regime on Monday, detailed in a new rule proposal and a 29-page speech from Fed governor Daniel Tarullo. Expect Ms. Yellen to get quizzed about the changes, which generally make the tests easier to pass for regional banks and tougher on global megabanks. Several lawmakers, especially Republicans, have their own ideas about how the Fed should make further changes to the tests, including by revamping the way it measures banks’ riskiness.</p> <ul> <li><strong>Banks in the Commodities Business</strong></li> </ul> <p>Last week, the Fed took another regulatory action that is sure to generate attention from members of Congress: It proposed new rules targeting some of banks’ commodity-market businesses, citing the risk of outsize liabilities in the event of an environmental disaster. Lawmakers might take the view that the rules are an end-run around Congress, which explicitly allowed banks to engage in those activities in 1999. Big banks have also lobbied extensively against the rules, with help from local officials who say they rely on banks to help finance purchases of natural gas and other commodities for their municipalities.</p> <ul> <li><strong>Wells Fargo and Executive Compensation</strong></li> </ul> <p>Republicans are likely to ask Ms. Yellen why the Fed and other regulators didn’t do more to stem misconduct at Wells Fargo, while Democrats will push for her to commit to finishing the incentive pay rules soon—a promise Comptroller of the Currency Thomas Curry made last week.</p> <ul> <li><strong>Monetary Policy</strong></li> </ul> <p>Fed policy makers’ decision last week to hold interest rates steady while hinting at an increase in the near future could easily come up Wednesday. The Fed chief made clear she was ready for a bump up in borrowing costs, saying the case for a rate increase “has strengthened.” Democrats could press Ms. Yellen on the effect that higher interest rates would have on the labor market, particularly among low-income and minority workers, who have been slow to recover from the recession. Republicans on the other hand could push for higher rates.</p> <ul> <li><strong>The Election</strong></li> </ul> <p>The Fed is finding itself in an unusual position this election cycle. While central bank officials try very hard to maintain their impartiality and skirt all talk of politics, they have had to parry charges from Donald Trump, the Republican presidential nominee, that they are artificially holding rates down to make President Barack Obama look good and to help Democrat Hillary Clinton get elected. Ms. Yellen spent much of her news conference last week defending the Fed’s impartiality. Mr. Trump accused the Fed again during Monday night’s debate of “doing political things.” Ms. Yellen could face questions related to the election from both sides of the aisle Wednesday. Don’t look for her to say more than she did during last week’s news conference, however.</p> <p>* * * </p> <p><em>Watch the hearing live below:</em></p> <p><iframe src="https://www.youtube.com/embed/uxVSYcDl9rk" width="560" height="315" frameborder="0"></iframe></p> <p>Janet Yellen's Prepared Remarks...<br /> </p><p style=" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> <a title="View Yellen Testimony on Scribd" href="https://www.scribd.com/document/325634979/Yellen-Testimony#from_embed" style="text-decoration: underline;" >Yellen Testimony</a></p> <p><iframe class="scribd_iframe_embed" src="https://www.scribd.com/embeds/325634979/content?start_page=1&amp;view_mode=scroll&amp;show_recommendations=true" data-auto-height="false" data-aspect-ratio="undefined" scrolling="no" id="doc_81534" width="100%" height="600" frameborder="0"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1280" height="853" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/yellen%20tesimony.jpg?1475071142" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/janet-yellen-testifies-five-key-things-look#comments Barack Obama Borrowing Costs Comptroller of the Currency Daniel Tarullo Donald Trump Financial Regulation House Financial Services Committee Janet Yellen Monetary Policy Natural Gas Recession Regional Banks Testimony Wells Fargo Wed, 28 Sep 2016 14:01:07 +0000 Tyler Durden 573458 at http://www.zerohedge.com Are "Invisible Americans" The Key Players In This Election? http://www.zerohedge.com/news/2016-09-28/are-invisible-americans-key-players-election <p><a href="http://charleshughsmith.blogspot.com/2016/09/are-invisible-americans-key-players-in.html"><em>Submitted by Charles Hugh-Smith via OfTwoMinds blog,</em></a></p> <p><em>Memo to the D.C. Beltway/mainstream media apologists and propagandists: <strong>the 25 million <em>Invisible Americans</em> are no longer buying your shuck-and-jive con job.</strong></em></p> <p><strong>For the bottom 90% of American households, the &quot;prosperity&quot; of the &quot;recovery&quot; since 2009 is a <em>bright shining lie</em>.</strong> The phrase is from a history of the Vietnam War, <a href="https://www.amazon.com/gp/product/0679724141/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0679724141&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=ade4172247864f14386029193a032112" target="resource">A Bright Shining Lie: John Paul Vann and America in Vietnam</a>.</p> <p><strong>Just as the Vietnam War was built on lies, propaganda, PR and rigged statistics</strong> (the infamous body counts--civilians killed as &quot;collateral damage&quot; counted as &quot;enemy combatants&quot;), <strong>so too is the &quot;recovery&quot; nothing but a pathetic tissue of PR, propaganda and lies.</strong> I have demolished the bogus 5.3% &quot;increase&quot; in median household income, the equally bogus &quot;official inflation&quot; body counts, oops I mean statistics, and the bogus unemployment rate:</p> <p><em><a href="http://www.oftwominds.com/blogsept16/median9-16.html" target="resource"> Fun with Fake Statistics: The 5% &quot;Increase&quot; in Median Household Income Is Pure Illusion</a> (September 19, 2016)</em></p> <p><em><a href="http://www.oftwominds.com/blogsept16/unemployment9-16.html" target="resource"> What&#39;s the Real Unemployment Rate? That&#39;s the Wrong Question</a> (September 14, 2016)</em></p> <p><em><a href="http://www.oftwominds.com/blogaug16/inflation-break8-16.html" target="resource"> Could Inflation Break the Back of the Status Quo?</a> (August 5, 2016)</em></p> <p><em><a href="http://www.oftwominds.com/blogaug16/inflation-crash8-16.html" target="resource"> Revealing the Real Rate of Inflation Would Crash the System</a> (August 3, 2016)</em></p> <p><em><a href="http://www.oftwominds.com/blogaug16/inflation8-16.html" target="resource"> Inflation Hidden in Plain Sight</a> (August 2, 2016)</em></p> <p><em><a href="http://www.oftwominds.com/blogaug16/burrito-index8-16.html" target="resource"> The Burrito Index: Consumer Prices Have Soared 160% Since 2001</a> (August 1, 2016)</em></p> <p><strong>I&#39;m not the only one calling the &quot;recovery&quot; a lie:</strong> the chairman of Gallup, Jim Clifton, recently unloaded on the &quot;recovery&quot;:</p> <p><a href="http://www.gallup.com/opinion/chairman/195680/invisible-american.aspx" target="resource"> The Invisible American</a>.</p> <p><em>&quot;I&#39;ve been reading a lot about a &quot;recovering&quot; economy. It was even trumpeted on Page 1 of The New York Times and Financial Times last week. I don&#39;t think it&#39;s true. </em></p> <p><em>The percentage of Americans who say they are in the middle or upper-middle class has fallen 10 percentage points, from a 61% average between 2000 and 2008 to 51% today.&quot; </em></p> <p><strong>Now that is a self-reported number. The reality is much worse: only 20% of American households possess the income and assets that characterize the middle class in financial terms.</strong> Granted, someone making $28,000 a year can self-identify as <em>middle class</em>, but if we look at basic metrics of financial security, they&#39;re not even close.</p> <p><strong>I have analyzed this in depth for years:</strong></p> <p><em><a href="http://www.oftwominds.com/blogoct12/three-classes10-12.html" target="resource"> The Three-and-a-Half Class Society</a> (October 22, 2012)</em></p> <p><em><a href="http://www.oftwominds.com/blogdec13/middle-class12-13.html" target="resource"> What Does It Take To Be Middle Class?</a> (December 5, 2013)</em></p> <p><em><a href="http://www.oftwominds.com/blogmay14/unaffordable5-14.html" target="resource"> The Destabilizing Truth: Only the Wealthy Can Afford a Middle Class Lifestyle</a> (May 6, 2014)</em></p> <p><em><a href="http://www.oftwominds.com/blogapr14/new-classes4-14.html" target="resource"> America&#39;s Nine Classes: The New Class Hierarchy</a> (April 29, 2014)</em></p> <p><img align="middle" border="0" class="wide" src="http://www.oftwominds.com/photos2013/income-top-10.jpg" width="550" /></p> <p><strong>We got your &quot;middle class&quot; right here: see that little green slice of the pie?</strong> The upper middle class is the purple slice, and the top 10% is blue (most of this wealth is held by the top 1% and top 5%.)</p> <p><img align="middle" border="0" class="wide" src="http://www.oftwominds.com/photos2012/median-net-worth5-12.png" width="550" /></p> <p><strong>Jim Clifton calls those who have been pushed out of the middle class <em>Invisible Americans</em></strong>: here is his report:</p> <p><em>&quot;Ten percent of 250 million adults in the U.S. is 25 million people whose economic lives have crashed. </em></p> <p><em>What the media is missing is that these 25 million people are invisible in the widely reported 4.9% official U.S. unemployment rate. </em></p> <p><em>Let&#39;s say someone has a good middle-class job that pays $65,000 a year. That job goes away in a changing, disrupted world, and his new full-time job pays $14 per hour -- or about $28,000 per year. That devastated American remains counted as &quot;full-time employed&quot; because he still has full-time work -- although with drastically reduced pay and benefits. He has fallen out of the middle class and is invisible in current reporting. </em></p> <p><em>More disastrous is the emotional toll on the person -- the sudden loss of household income can cause a crash of self-esteem and dignity, leading to an environment of desperation that we haven&#39;t seen since the Great Depression. </em></p> <p><em>Millions of Americans, even if they themselves are gainfully employed in good jobs, are just one degree away from someone who is experiencing either unemployment, underemployment or falling wages. We know them all.&quot; </em></p> <p><strong>This is where the <em>bright shining lies</em> come in.</strong> The worker now earning $28,000 annually is counted as employed, but there is no official metric for the household&#39;s increasing insecurity and loss of opportunity.</p> <p><strong>Even worse, nobody tracks the erosion of benefits.</strong> Not only has nominal pay plummeted from $65,000 to $28,000, the deductions for the employee&#39;s share of healthcare insurance have skyrocketed, along with co-pays for meds, visits to a doctor, eyewear, etc.</p> <p>The lucky employees may still receive the benefit of matching 401K retirement funds from the employer, but the matching sums have declined.</p> <p><strong>This is death by a thousand cuts.</strong> According to <a href="https://fredblog.stlouisfed.org/2016/09/wages-with-benefits/" target="resource"> a report by the St. Louis Federal Reserve</a>, real (adjusted for official inflation) wages have risen a mere 3% since 1970--46 years ago.</p> <p><strong>Could the 25 million <em>Invisible Americans</em> be the key swing demographic in the upcoming presidential election?</strong> As I noted in <a href="http://www.oftwominds.com/blogsept16/depression9-16.html" target="resource"> What If We&#39;re in a Depression But Don&#39;t Know It?</a> (September 23, 2016), The top 5% of households that dominate government, Corporate America, finance, the Deep State and the media have been doing extraordinarily well during the past eight years of &quot;recovery,&quot; <strong>and so they report that the economy is doing splendidly <em>because they&#39;ve done splendidly.</em></strong></p> <p><strong>The gulf between reality and the official happy story of &quot;recovery&quot; spewed by the status quo&#39;s well-paid army of apparatchiks, flunkies, flacks, hacks, toadies, lackeys and functionaries gorging at the trough of the status quo is widening to the point of surrealism.</strong> Memo to the D.C. Beltway/mainstream media apologists and propagandists: the 25 million <em>Invisible Americans</em> are no longer buying your shuck-and-jive con job.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="322" height="95" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160928_invisible.jpg?1475067166" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/are-invisible-americans-key-players-election#comments Consumer Prices Corporate America ETC Federal Reserve Gallup Great Depression New York Times Real Unemployment Rate Reality recovery Unemployment Wed, 28 Sep 2016 13:35:57 +0000 Tyler Durden 573456 at http://www.zerohedge.com "There's A Real Problem Here" - Did Fed's Plosser Just Admit Trump Is Right About Yellen? http://www.zerohedge.com/news/2016-09-28/theres-real-problem-here-did-feds-plosser-just-admit-trump-right-about-yellen <p>Former Philly Fed President Charles Plosser got a lot off his chest this morning during a Bloomberg TV interview. Decrying that<strong> central bankers "wring their hands all the time,"</strong> Plosser noted that The Fed was very "concerned about credibility," and was<strong> "pretty good at conjuring up reasons not to act."</strong> </p> <p><iframe src="https://www.bloomberg.com/api/embed/iframe?id=a0f86e03-0032-4d74-a926-476ffa143428" width="560" height="315" frameborder="0"></iframe></p> <p>His mutinous discussion then concluded, sounding very Trumpian, by noting that <strong>The Fed "shouldn't be afraid a recession might come," exclaiming "there's a real problem here" with The Fed. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_plosssr1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_plosssr1.jpg" width="600" height="460" /></a></p> <p>Additional headlines include:</p> <ul> <li>*PLOSSER: FED'S `IN A VERY DIFFICULT POSITION'</li> <li><strong>*PLOSSER: `THERE'S A REAL PROBLEM HERE' WITH FED</strong></li> <li>*PLOSSER: FED IS VERY CONCERNED ABOUT CREDIBILITY</li> <li><strong>*PLOSSER: CENTRAL BANKERS `WRING THEIR HANDS ALL THE TIME'</strong></li> <li>*PLOSSER: THERE'S FED DISSENT BECAUSE THERE IS UNCERTAINTY</li> <li>*PLOSSER: `DISSENT IS HELPFUL' FOR FED</li> <li><strong>*PLOSSER SAYS FED PRETTY GOOD AT CONJURING UP REASONS NOT TO ACT</strong></li> <li><strong>*PLOSSER SAYS FED SHOULDN'T BE AFRAID RECESSION MIGHT COME</strong></li> <li><strong>*PLOSSER: WISHES FED ‘WOULD GET ON WITH IT’ AND RAISE RATES</strong></li> <li>*PLOSSER: NOVEMBER FED MEETING ‘NOT A DEAD MEETING BY ANY MEANS’</li> </ul> <p>It seems Yellen is losing control of the narrative as more and more insiders 'get outside'; and perhaps, after all the establishment shock, Trump is right about the political nature of The Fed.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="245" height="162" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160928_plosssr.jpg?1475065585" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/theres-real-problem-here-did-feds-plosser-just-admit-trump-right-about-yellen#comments headlines Philly Fed Recession Wed, 28 Sep 2016 13:30:33 +0000 Tyler Durden 573446 at http://www.zerohedge.com California Police Shoot Unarmed Black Man Behaving "Erratically" In Southern California http://www.zerohedge.com/news/2016-09-28/california-police-shoot-unarmed-black-man-behaving-erratically-southern-california <p>Crowds gathered after an unarmed black man who was "behaving erratically" died after being shot by a police officer in El Cajon in southern California on Tuesday, the local police department said, appealing for calm. </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Officers responded to an erratic subject that ended with an officer involved shooting. We will post updates here as they are available.</p> <p>— El Cajon Police (@elcajonpolice) <a href="https://twitter.com/elcajonpolice/status/780898728563441664">September 27, 2016</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>The death comes less than two weeks after black men in Charlotte, North Carolina and in Tulsa, Oklahoma, were shot dead by police, sparking protests. In Charlotte, rioting prompted the authorities to impose a state of emergency.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en"><a href="https://twitter.com/hashtag/elcajon?src=hash">#elcajon</a> update <a href="https://t.co/Ep0rorRkbV">pic.twitter.com/Ep0rorRkbV</a></p> <p>— ana. (@ana_lauraSD) <a href="https://twitter.com/ana_lauraSD/status/780969267894243328">September 28, 2016</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>As <a href="http://www.reuters.com/article/us-usa-police-elcajon-idUSKCN11Y0SV">Reuters reports</a>, EL Cajon Police Department spokesman Rob Ransweiler told reporters that two officers responded to a call about an “erratic subject” who was claimed to be walking into traffic. The man refused their instructions to remove his hand from his pocket and then pulled out an object from his pants and pointed it at them, the department said in a statement. The officers then simultaneously shot and Tasered the man who died after being taken to hospital, the department said.</p> <p><iframe src="https://www.youtube.com/embed/jU4XHTU82xI" width="500" height="281" frameborder="0"></iframe></p> <p>A woman on the scene who claimed to be his sister is saying that she was the one who called the police, because her brother needed medical attention, NBC-owned local channel KNSD reported. A witness who lives nearby told KNSD that he saw police officers surround a black man with their guns drawn. He described the man as seeming fearful and lurching to the side with his hands up before being shot five times by the police. A second witness claimed to have seen the same thing.</p> <p>However, an employee at the restaurant of the parking lot where the confrontation took place claimed to have recorded the entire incident. Her manager told KNSD that she had seen the video and heard police instruct the victim to remove his hands from his hip. It is not known whether his hands were in his pockets, pants or just on his hip. The video allegedly also showed the victim’s sister pleading for her brother to cooperate. Police have viewed the video and interviewed the employee.</p> <p>An additional witness was recorded in a Facebook Live video saying that the sister was pleading with her brother to take his hands out of his pockets and when he did, “he did have something in his hand but it wasn’t a gun.”</p> <p>Statements made by the sister to reporters also imply that her brother was not showing his hands. His sister was recorded crying “He’s so sick” in a Facebook Live video posted by another woman on the scene.</p> <p>During a news conference hours after the shooting, El Cajon Police Department Jeff Davis said no weapon was found on the scene. He did not say what exactly the man pointed at the unidentified officers.</p> <p>The man, who was later identified as <a href="http://rock.ly/jyw24">Alfred Olango</a>, was hospitalized and left in a critical condition, according to Fox-affiliate KSWB. However his sister told reporters that her brother died at the scene. The American Civil Liberties Union later confirmed the man died, but did not specify where and when.</p> <p>Other videos show her asking police, “Why couldn’t you guys tase him? Why, why, why? I told you he’s sick.”</p> <p>“I called you to help me but you killed my brother,” she also said.</p> <p>It remains unknown whether the man was armed. When Ransweiler was questioned about it, he told KNSD, “I have the information, I’m just not…It’s an ongoing investigation, so I’m not releasing details of the investigation.”</p> <p>The shooting is not the only El Cajon police action under scrutiny. Employees at the nearby Los Panchos restaurant claimed that police confiscated cell phones from employees and advised them to not talk to anyone about the shooting.</p> <p>The ACLU has released a statement saying, “there are disturbing reports from a number of witnesses that police officers confiscated cell phones from people who witnessed the shooting. Confiscating cell phones is a violation of the Fourth Amendment (unreasonable seizure without warrant or exigent circumstance) and the First Amendment (interference with the right to record in public) under the U.S. Constitution and analogous rights under the California Constitution.”</p> <p>El Cajon Police have denied confiscating cellphones and urged the community to "please be careful about reacting to inaccurate information."</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">We ask that the community please be careful about reacting to inaccurate information. No phones were confiscated from anyone at the scene.</p> <p>— El Cajon Police (@elcajonpolice) <a href="https://twitter.com/elcajonpolice/status/780957438585352192">September 28, 2016</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>Many people claim that the man was having or had recently had a seizure when he was shot. While there has been no official statement on his health or condition at the time of the shooting, confusion and unresponsiveness can occur after a grand mal seizure.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">The investigation just started, but based on the video voluntarily provided by a witness, the subject did NOT have his hands up in the air</p> <p>— El Cajon Police (@elcajonpolice) <a href="https://twitter.com/elcajonpolice/status/780961171230760961">September 28, 2016</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>"Now is a time for calm," Davis said at the news conference. "I implore the community to be patient with us, work with us, look at the facts at hand before making any judgment."</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1098" height="585" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shooting%20man.jpg?1475068635" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/california-police-shoot-unarmed-black-man-behaving-erratically-southern-california#comments First Amendment Oklahoma Reuters Twitter Twitter Wed, 28 Sep 2016 13:17:22 +0000 Tyler Durden 573453 at http://www.zerohedge.com End Of An Era: BlackBerry To Stop Making Smartphones http://www.zerohedge.com/news/2016-09-28/end-era-blackberry-stop-making-smartphones <p><strong>The age of the iconic keyboard-ed smartphone is over </strong>as BlackBerry's John Chen confirmed that the firm will stop developing hardware in-house as its pivot to software shows “signs of momentum”. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_bbry1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_bbry1_0.jpg" width="600" height="346" /></a></p> <p><a href="http://www.bloomberg.com/news/articles/2016-09-28/blackberry-misses-sales-estimates-amid-slowing-software-growth">As Bloomberg reports,</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>BlackBerry has completely outsourced smartphone design and production, a process that Chen had been doing piecemeal since taking over as CEO almost three years ago. </p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_bbry3.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_bbry3.jpg" width="588" height="452" /></a></p> <p>&nbsp;</p> <p>Analysts had been holding their breath for the news after Chen said September was his deadline for making the chronically money-losing device business profitable. <strong>BlackBerry’s device business, which it calls "Mobility Solutions," will focus on developing applications and an extra-secure version of Google’s Android operating system that it can license to other companies.<br /> </strong></p> <p>&nbsp;</p> <p>“Our new Mobility Solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia,” Chen said in a statement. </p> <p>&nbsp;</p> <p>“Under this strategy,<strong> we are focusing on software development, including security and applications. </strong>The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital.”</p> </blockquote> <p>What will Hillary do? </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_bbry2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_bbry2.jpg" width="588" height="335" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="544" height="266" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160928_bbry.jpg?1475064400" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/end-era-blackberry-stop-making-smartphones#comments Wed, 28 Sep 2016 13:05:41 +0000 Tyler Durden 573451 at http://www.zerohedge.com Core Durable Goods Orders Contract For 20th Straight Month - Longest Non-Recessionary Streak In US History http://www.zerohedge.com/news/2016-09-28/core-durable-goods-orders-contract-20th-straight-month-longest-non-recessionary-stre <p>In the last 60 years, the<strong> US economy has never suffered such a long contraction in core durable goods orders (20 months) without officially being in recession</strong>.</p> <p>It&#39;s probably nothing... US Durable Goods New Orders Ex Transports YoY down for the 20th straight month...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_durgoods.jpg"><img height="314" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/20160928_durgoods_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Headline (short-term) data beat thanks to notably lower revisions.</p> <ul> <li>Durable Goods Orders unchanged MoM (exp -1.5%, prior revised markedly lower from +4.4% to +3.6%)</li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/durables%20headline%20sept.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/durables%20headline%20sept.jpg" style="width: 601px; height: 333px;" /></a></p> <ul> <li>Durables Ex Trans -0.4% MoM (exp -0.5%, prior revised lower from +1.3% to +1.1%)</li> <li>Capital Goods New Orders Non-Defense, Ex-Aircraft +0.6% (-0.1% exp but prior revised from +1.5% to +0.8%)</li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/Core%20Capex%20Sept.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/09/23/Core%20Capex%20Sept_0.jpg" style="width: 600px; height: 368px;" /></a></p> <p>But for the 4th month in a row, <strong>Capital Goods Shipments (Ex Air) fell MoM - down 0.4%, missing expectations of a 0.1% rise, and historical data was revised lower.</strong></p> <p>Thank the lord of war for saving the economy again...</p> <ul> <li>5.8% drop in Computer new orders</li> <li>0.5% drop in Machinery</li> <li>0.5% drop in Fabricated products</li> <li>2.0% drop in Communication equipment</li> <li>2.5% drop in Electrical equipment and appliances</li> <li>21.9 drop in Nondefense aircraft and parts</li> </ul> <p>BUT</p> <ul> <li><strong>23.6% surge in defense capital goods new orders</strong></li> </ul> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="962" height="504" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160928_durgoods.jpg?1475066561" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/core-durable-goods-orders-contract-20th-straight-month-longest-non-recessionary-stre#comments Recession Wed, 28 Sep 2016 12:42:53 +0000 Tyler Durden 573448 at http://www.zerohedge.com House Reaches Deal On $170MM Aid To Flint To Avoid Government Shutdown http://www.zerohedge.com/news/2016-09-28/house-reaches-deal-avoid-government-shutdown <p>Nancy Pelosi and Paul Ryan have seemingly reached a <strong>deal to keep the federal government running for another 3 months</strong>.&nbsp; A deal was originally delayed over a dispute on funding for the water crisis in Flint, Michigan, Zika funding for Florida and aid to flood victims in Louisiana.&nbsp; The agreement struck between Ryan and Pelosi ultimately will provide $170 million to help Flint and other cities with water emergencies which would be added as an amendment to a separate water projects bill.</p> <p>According to <a href="http://www.thehill.com/policy/transportation/298201-house-strikes-deal-on-flint-aid-in-water-bill">The Hill</a>, the agreement comes after Senate Democrats and a handful of Republicans blocked a stop-gap spending bill to fund the government past Sept. 30.&nbsp; Democrats vowed to block the stopgap funding bill Tuesday afternoon, after a House version of the bill included aid to Florida to fight the Zika virus and aid to help Louisiana flood victims but did not provide funding for the water crisis in Flint, Michigan.&nbsp;&nbsp; </p> <p>Per <a href="http://www.nbcnews.com/news/us-news/congressional-showdown-vote-looms-funding-bill-n655371">NBC</a>, Senate Minority Leader Harry Reid (D-Nev) vowed to fight any legislation that excluded funding for Flint.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"<strong>Democrats have been clear that Congress should not leave Flint and other lead-tainted communities out of any (stopgap spending) negotiation that includes emergency disaster funding</strong>.&nbsp; Our request is simple: include both bipartisan disaster relief packages for consideration in the CR. We urge you to include bipartisan Flint legislation in the CR."</p> </blockquote> <p><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2016/09/27/paul%20ryan%20nancy%20pelosi_0.jpg" alt="Paul Ryan" width="600" height="446" /></p> <p>The Senate originally passed a version of the waterways bill that included a $220 million Flint aid package, but the House version lacked the same drinking water provisions. That said, the House Rules Committee agreed late Tuesday night to allow a floor vote on a bipartisan amendment from Reps. Dan Kildee (D-Mich.) and John Moolenar (R-Mich.) that would authorize up to $170 million for communities around the country that are facing a drinking water crisis.&nbsp; </p> <p>The deal between the House leaders promises to free up the short-term spending measure, which had failed to advance in the Senate on Tuesday. That had left lawmakers facing responsibility for a government shutdown at midnight Friday, if they did not act.</p> <p>Of course, with the presidential election just a couple of months away it's not terribly surprising that this issue was cleared up with relative ease.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="2592" height="1927" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/paul%20ryan%20nancy%20pelosi.jpg?1475065007" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/house-reaches-deal-avoid-government-shutdown#comments Florida Michigan Nancy Pelosi NBC Wed, 28 Sep 2016 12:33:22 +0000 Tyler Durden 573447 at http://www.zerohedge.com Not Even An OPEC Deal Will Stop Oil Going Lower, Goldman Warns http://www.zerohedge.com/news/2016-09-28/not-even-opec-deal-will-stop-oil-going-lower-goldman-warns <p>Having been bullish for nearly half a year, <a href="http://www.zerohedge.com/news/2016-09-27/goldman-cuts-oil-price-target-50-43-rising-global-surplus">yesterday Goldman's flipped again</a>, when it cut its Q4 oil price target from $50 to $43, admitting the previously anticipated rebalancing will take longer to achieve, and now expects "a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously." Moments ago, the same Goldman analyst released a follow up note, confirming what we have been saying for the past year, namely that OPEC is increasingly irrelevant as a marginal supply-setter in a world in which it is the lack of demand that is a far bigger threat. </p> <p>In "OPEC won't stop oil going", Damien Courvalin writes that "an OPEC deal to curb oil production, either today or at the November meeting, is thought more likely than at any point in the past two years." That said, he notes, "we remain sceptical of its impact. For one, our production forecast continues to reflect a seasonal Saudi production decline into year-end, with no growth elsewhere. Second, even with this OPEC help, our updated oil supply-demand forecast now points to a renewed build in inventories in 4Q 2016 vs. a forecast for a draw only last month. <strong>This weaker oil outlook into year-end led us yesterday to lower our year-end WTI oil price forecast to $43/bbl, from $51/bbl previously. </strong>Given a well-supplied market and a crude curve in contango (with limited spot upside)."</p> <p><em>Here are the details behind Goldman's pessimism: </em></p> <p>Intraday oil price volatility has picked up over the past week and ahead of today’s OPEC advisory meeting in Algiers. Statements by participants suggest a deal to curb production today or at the next meeting in November is more likely than at any point over the past two years. We remain sceptical of its impact, for two reasons: (1) independent of today’s outcome, our production forecast continues to reflect a seasonal Saudi production decline into year-end and no growth elsewhere, the equivalent of a deal; and (2) even with this OPEC help, our updated oil supply-demand forecast now points to a renewed build in inventories in 4Q 2016 vs. a forecast for a draw only last month.</p> <p>This weaker oil outlook into year-end led us yesterday to lower our year-end WTI oil price forecast to $43/bbl, from $51/bbl previously, and still below the forward curve even after yesterday’s sell-off (“Beyond Algiers, weakening oil fundamentals,” September 27, 2016). While a potential OPEC deal today could support prices in the short term, we find that the potential for fewer disruptions and the relatively high speculative net long positioning instead leave risks to our forecast squarely skewed to the downside. Given the uncertainty on forward supply-demand balances, we reiterate our view that oil prices need to reflect near-term fundamentals – which are weaker – with a lower emphasis on the more uncertain longer-term fundamentals. </p> <p>This renewed weakness in fundamentals reflects the three key drivers of the ongoing oil market rebalancing:</p> <ul> <li><strong>New Oil Order</strong>: Low cost production continues to surprise to the upside, most recently in Saudi Arabia and the UAE, previously in Iraq and Iran, and next in Russia. This relentless production growth reflects the core of the New Oil Order, where the flattening of the oil cost curve created by shale leads to a loss of pricing power by low-cost producers, leaving them with only volume growth to sustain fiscal revenues (“OPEC loses pricing power, shale shifts to the margin,” October 26, 2014).</li> <li><strong>Wall of Supply</strong>: The ramp up in new production capacity outside of OPEC is set to accelerate into year-end, with 2017 additions of projects started up to 2014 expected to be 30% higher than in 2016 (“The Battle for Capital: A Flatter Cost Curve Drives OPEC Growth and Non-OPEC Deflation,” Top Projects 2016, May 20, 2016). In turn, the US production declines are set to slow even at the current low rig count given the rising age of producing wells (less drilling of new wells) and the much smaller decline rates of mature shale oil wells.</li> <li><strong>Détente</strong>: Collapsed fiscal revenues are incentivising both a 'detente' in areas where geopolitical conflicts have disrupted production as well as a deflationary reduction in local taxation as countries fight to compete with US shale for revenues and capital (“More worried about a thaw than a freeze,” Commodities Research, August 22, 2016). As a result, the surge in short-term production disruptions that balanced the oil market unexpectedly in 2Q 2016 is slowly starting to reverse.</li> </ul> <p>Importantly, even if disruptions remain at current levels in Libya and Nigeria, and Saudi reduces production into year-end, we project that global oil supply will continue to rise in coming months driven by low cost production growth and new project deliveries. We continue to view such supply shifts as the key drivers to oil prices through 2017, especially given today’s high level of inventories. Oil demand growth, and in particular China’s, has remained the bright spot of the oil market over the past two years. This strong demand growth has been supported by both low prices as well as the ongoing rotation from investment to consumption which put downward pressure on demand for CapEx commodities used in infrastructure and manufacturing, such as steel, relative to OpEx commodities exposed to consumer spending, such as oil.</p> <p>Medium term, we believe that the decline in drilling activity around the world is still setting the stage for an eventual recovery in prices. For now, our 2017 outlook remains unchanged, with demand and supply projected to remain in balance and WTI oil prices to average $53/bbl, with a 1H 2017 expected trading range of $45-$50/bbl. The risks around this forecast remain high, however, with our forecasts conservative on both further low cost production growth and further disruption reversals, which combined represent today 1.6% of global supply, the equivalent of the average global oil surplus observed during 1Q 2015 – 1Q 2016.</p> <p>Assuming, for example, that global supply exceeds our forecasts by 400 kb/d (0.4%), <strong>our models imply that oil prices would need to average $43/bbl on average next year</strong>. Such a scenario is not that unlikely as it could be reached <strong>either (1) with half of Libya’s and Nigeria’s current disruptions reversing, (2) 2017 non-OPEC new projects coming online in line with company guidance instead of our lower 'risked' forecasts, or finally (3) Iran and Iraq delivering on their advertised production growth instead of our more conservative expectations.</strong></p> <p>Given our outlook for a well supplied market and a crude curve in contango with limited spot upside, we continue to recommend being short the S&amp;P GSCI Crude Oil index, especially paired with positive yielding oil-exposed assets such as HY E&amp;P credit, which is our recommended Top Trade #8.</p> <p>* * * </p> <p>This is what other analysts believe as we await today's OPEC conference:</p> <p><strong>Vitol chief executive officer Ian Taylor</strong></p> <ul> <li>Oil market may not tighten until 2018</li> <li>Can’t see good reason for “major increase” in prices</li> <li>Energy market remains “way oversupplied,” low oil price is “a struggle” for OPEC countries</li> </ul> <p><strong>BNP Paribas head of commodity markets Harry Tchilinguirian</strong></p> <ul> <li>Nothing concrete to come from OPEC</li> <li>WTI to trade in a range of $35-$50/bbl</li> <li>Global crude balance “won’t change much”</li> </ul> <p><strong>Citigroup analysts incl. Seth Kleinman and Ed Morse</strong></p> <ul> <li>“Widening gulf” between Iran, Saudi Arabia on oil deal, analysts write in report dated Sept. 27</li> <li>Disparity between Saudi Arabia and Iran on acceptable level of output will likely see talks at Algiers or meetings in near future fail</li> <li>“All options on the table are essentially a direct trade-off between the market shares of Iran and Saudi Arabia”</li> </ul> <p>In short, for OPEC it may be lose-loser, as the following schematic circulating on Twitter shows.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/09/20/opec%20dilemma.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/09/20/opec%20dilemma_0.jpg" width="500" height="340" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="622" height="423" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/opec%20dilemma.jpg?1475064774" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/not-even-opec-deal-will-stop-oil-going-lower-goldman-warns#comments Citigroup Contango Crude Crude Oil Iran Iraq OPEC OpEx recovery Saudi Arabia Twitter Twitter Volatility Wed, 28 Sep 2016 12:07:26 +0000 Tyler Durden 573445 at http://www.zerohedge.com Will Yellen Resign If Trump Wins http://www.zerohedge.com/news/2016-09-28/will-yellen-resign-if-trump-wins <p>Perhaps the most memorable aspect of Monday's presidential debate from a policy standpoint, was Donald Trump's latest attack on the Fed, and its chair, Janet Yellen. As a reminder, Trump repeated a claim he has made before, saying the economy was in a "big, fat, ugly bubble" and went straight for Yellen when he said: "And we have a Fed that's doing political things. This Janet Yellen of the Fed." He also gave his version about what might happen next at the Fed. </p> <p>"On the day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you're going to see some very bad things happen, because the Fed is not doing their job. <strong>The Fed is being more political than Secretary Clinton.</strong>"</p> <p>This puts Yellen in a bind. As <a href="http://www.afr.com/markets/equity-markets/forget-trump-and-deutsche-bank-janet-yellen-is-the-next-big-risk-20160928-grq2y5">AFR's Philip Baker writes</a>, "<strong>Trump's attack on the Fed chairwoman during this week's presidential debate was so vicious that Paul Ashworth, chief US economist at Capital Economics, now thinks it's possible Yellen will have to resign if Trump ends up becoming president</strong>." </p> <p>While Trump has criticised Yellen in the past on numerous occasions, on Monday night be upped the ante "big league" - Ashworth argues that the "veracity" of the claims are "irrelevant" and it doesn't even matter if Trump himself doesn't really believe what he said. </p> <p>"It's all to do with how voters react to his comments", Ashworth notes, adding that "if those claims are made publicly to a viewing audience of up to 100 million Americans, and a majority of those Americans then go on to vote for Trump in November's election, <strong>then what choice does Yellen have? It's true that Yellen might still have the support of Congress, but she could not argue that she enjoys the confidence of the American people</strong>" he wrote in a note to clients. </p> <p>To be sure, Yellen isn't the first head of the Fed to cop it from presidential hopefuls during their campaigns. In 2011 Ben Bernanke wore a few barbs from Republican candidate Rick Perry when he was accused of "treasonous" behaviour after the Fed started its program of quantitative easing. There had also been some tension with Fed chiefs when George H.W.&nbsp; Bush and Richard Nixon were presidents.</p> <p>To be sure, in most respects, Trump is right and the Fed is indeed a political creature, as the following anecdote from the <a href="http://www.nytimes.com/interactive/2015/04/02/business/economy/audit-the-fed-timeline.html">NYT reveals clearly</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>in 1965, President Lyndon B. Johnson, who wanted cheap credit to finance the Vietnam War and his Great Society, summoned Fed chairman William McChesney Martin to his Texas ranch. <strong>There, after asking other officials to leave the room, Johnson reportedly shoved Martin against the wall as he demanding that the Fed once again hold down interest rates. Martin caved, the Fed printed money, and inflation kept climbing until the early 1980s.</strong></p> </blockquote> <p>But while the Fed's implicit role in US politics, and especially its funding, is nothing new, never before has the central bank played such a prominent role in every aspect of the economy, and certainly capital markets. </p> <p>Which brings us back to Trump's talking point: "Trump's criticism of the Fed last night was clearly a prepared talking point. The chances are that he will return to it in the remaining two debates," Ashworth said. </p> <p>So what would happen under a Trump presidency? Ashworth thinks that Yellen would resign fairly quickly as a matter of principle and it throws a spanner in the works for the Fed. </p> <p><strong>"If Yellen's resignation triggered a renewed bout of market turbulence then that would make a December rate hike less likely anyway. </strong>Even if Yellen stays, however, given his stance on both trade and fiscal policy, a Trump win could trigger an adverse market reaction that persuades the Fed to hold fire" he wrote.&nbsp; </p> <p>Come to think of it, for those who have railed against the Federal Reserve's for years, accusing it correctly of its encroaching takeover of every aspect of the US economy, enabling the government's nearly $10 trillion debt issuance spree since the financial crisis, not to mention its takeover of capital markets - manifesting most vividly in a hedge fund industry that is slowly imploding having no clue how to trade today's "market" - perhaps merely a Yellen resignation would be a sufficient reason to get Trump inside the White House.&nbsp; And yes, risk assets would not be happy with such an outcome. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1280" height="853" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Yellen%20confused%203_11.jpg?1475063137" /> </div> </div> </div> http://www.zerohedge.com/news/2016-09-28/will-yellen-resign-if-trump-wins#comments B+ Ben Bernanke Ben Bernanke Capital Markets Janet Yellen Quantitative Easing White House Wed, 28 Sep 2016 11:47:01 +0000 Tyler Durden 573444 at http://www.zerohedge.com